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DoT decision gave Reliance Jio a Rs3,367-cr windfall: CAG

09 May 2015

Reliance Jio Infocomm Ltd, the telecom arm of Mukesh Ambani-controlled Reliance Industries Ltd, got an ''undue benefit'' of Rs3,367.29 crore because the government allowed it to offer voice services over wireless broadband spectrum it had won in 2010 4G auction, the Comptroller and Auditor General of India (CAG) said on Friday.

The telecom department's (DoT) decision to allow Jio to migrate from a mere internet service provider (ISP) to a full telecom service provider, enabling it to offer voice services, under a Unified Licence (UL) has been done at a cost far lower than the market price prevalent in August 2013, the CAG said in a report submitted to Parliament.

By allowing Reliance Jio to offer voice services over the broadband spectrum it won in the 2010 4G auctions, the telecom department has failed to realise the real value of spectrum, which is a national asset, the national auditor said.

"This migration, allowed at prices discovered in 2001, resulted in undue advantage of Rs3,367.29 crore to Reliance Jio Infocomm," the CAG said in the report.

According to the CAG, the entry fee of Rs1,658.57 crore was discovered in 2001 and the DoT's lapses - non-accounting of time value of migration fees - resulted "in an undue advantage of Rs3,367 crore" for Reliance Jio.

Reliance Jio was granted a unified licence on 21 October 2013, under which it was allowed to provide voice services.

This decision to migrate "helped the ISP to circumvent the restrictions imposed by their licence at the time of auction, which were known to the ISP at the time of bidding for BWA spectrum," CAG stated in its report.

The report also noted that the winners of airwaves have also not met roll-out obligations, even four years after the auction.

Reliance Industries bought the company (formerly Infotel) now known as Reliance Jio in 2010. It is the only firm in the country to have a licence for pan-India broadband wireless airwaves, though it has yet to start commercial services.

In a statement, a Jio spokesperson said no favour has ever been given to the company, and that the company has always abided by prevailing laws. "We have acquired all our spectrum at market prices through open and transparent bidding processes, the conditions for which were same for all bidders. Further, the DoT rules for procuring the relevant licence for services using BWA spectrum too were the same for all successful bidders," the spokesperson said.


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